In the second post of our series on trends facing small and midsize businesses in 2019, we focus on technology trends.

Into the future, technology departments and their management teams must address aging systems and resolve data and privacy issues, while creating client-facing technologies that drive enterprise value. [i] As emerging technologies take hold, so do new realities.

5G will change the world

While artificial intelligence, augmented reality and IoT get all the attention, 5G is the red-headed stepchild of technology. 5G, the technology that will increase networking speeds by 10 to 100x, is so important that governments, such as the United States, China and South Korea, are in an arms race to launch it. The Trump administration even blocked a Qualcomm-Broadcom merger out of fear that it would propel China into the lead in 5G. [ii]

5G will be an enabler to driverless cars, Uber’s announced food-delivery drones, virtual reality and remote surgeries. AT&T and Verizon are planning launches in U.S. cities in Q4 of this year. [iii]

The SaaS revolution and small businesses

The broad adoption of software as a service (SaaS), infrastructure as a service (IaaS), and platform as a service (PaaS) extends beyond software and is changing how business is done.

For years, business leaders have struggled to find sector-specific solutions that meet their disparate needs.

In particular, companies that were formerly pure-play CRM providers (such as Pipedrive, Insightly and Zoho) are bundling many applications, including project management, web conferencing, collaboration software, email marketing, survey tools and help desk, that represent an enterprise-level software solution for small and medium sized businesses. In 2019 and beyond, look for continued adoption of these products that are scalable, configurable and inexpensive.

CRM has now has expanded reach, in part, because these solutions have powerful marketing automation features that enable customer engagement with surgical precision.

Solutions that are a one-trick ponies (companies such as SurveyMonkey and Constant Contact come to mind) will vertically integrate or be replaced. Meanwhile, collaboration software products like Slack and Wrike are growing like wildfire, as companies go virtual and attempt to reduce reliance on email.

The battle for cloud

A wrestling match has ensued for the $40 billion cloud business, with Amazon, Microsoft and Google fighting for the large contracts (especially with big boxes).

While Amazon holds a commanding lead in web services, Microsoft is stirring the drink in its attempt to recapture its leadership position. Microsoft is re-positioning in “hybrid computing” that combines cloud and internal data centers. The Microsoft Azure cloud business grew 76 percent last year. [iv]

Ironically, Microsoft (once the 900-pound gorilla) is positioning itself as the alternative to Amazon, which is viewed by many as having too much market power in businesses, such as the food industry where it is both a grocer and a systems provider. [v]

The conflict that is augmented intelligence, analytics and privacy

While some fear that computers will run the world, artificial intelligence (AI) is already here. Five out of six Americans regularly use AI-based applications on a daily basis, such as navigation apps, streaming services, smartphone digital assistants and ride sharing apps. While automation replaces jobs, AI is a boon to the U.S. economy and is expected to support 23 million jobs worldwide by 2020. [vi]

Perhaps the most exciting opportunity presented by artificial intelligence is the data it will create. AI-enabled analytics will allow machines to mine data for real-world insights that companies will leverage to better deploy their equipment and labor. Ecommerce companies are already automating decisions about placement, pricing and promotion on their sites. However, companies face an uphill battle with data integrity that will hinder adoption of artificial intelligence and robotic process automation (RPA).

2019 marks a unique time in history when robots will begin to make their own decisions. To date, the use of most robots has been for repeatable manual labor functions. But new uses are proliferating, such as farmers using drones to calculate yields in their fields or redirect automated harvesting equipment. [vii]

Large tech firms are also in flux as privacy concerns are governing decisions about business models, infrastructure and security. Companies are being “re-engineered by the value of the data that they generate”, and the risk that security breaches present in terms of reputation and lost customers. [viii]

In 2019, the FANG companies (Facebook, Amazon, Netflix and Google), as well as Microsoft and others are under immense pressure by Congress, regulators and the public to police their privacy systems and policies. This is accelerated by the looming threat of U.S. adoption of E.U. privacy standards, which are much more stringent.

Ecommerce is still on a tear

Ecommerce sales are expected to grow over 22 percent in 2019. While smartphones are credited with 58 percent of traffic, 2019 will mark the first time when over half of online transactions will originate on a smart device. [ix]

We are in an age of personalization where shoppers expect highly relevant content and shopping experiences that deliver the products they want quickly. About 73 percent of shoppers utilize multiple channels (omnichannel) in the pursuit of a product. Sellers report the lack of cross-channel data as their No. 1 barrier, a focus of AI providers who will marry data across their platforms. For example, we have several Vistage members utilizing Microsoft Power BI for omnichannel analytics.

The bots are here

Given the scarcity of talent, companies are desperate to automate low-value functions.

85 percent of transactions will be possible without the use of a human being by 2020.

69 percent of consumers cite speed as their criteria in assessing satisfaction in a customer service transaction. [x]

Studies reveal no improvement in terms of customer experience online over the last three years, and an inherent lack of engagement. Providers are trading human contact for speed. [xi]

Customer service will be the first domino to fall as machines replace office workers. In the next two years, companies will be assessing how to escalate calls and provide blended solutions that integrate bots and human interaction, based on circumstances and customer value.

Internet of Things

IoT devices will be in 300 million homes worldwide by 2020. [xii] About 85 percent of companies are expected to imbed IoT in their solutions to drive efficiencies and personalize experiences. Companies are starting to unlock the value of devices and data, from grocery lists to television viewing. Moving into 2019-2020, the emphasis will shift from selling 1.0 devices toward examining data in real time.

Quantum computing

The U.S. is forging a new approach to lead in quantum computing, using subatomic particles to make complex calculations. The technology will pave the way for better encryption and surveillance.

Blockchain: Back to reality

Now that the cryptocurrency market has cooled, useful applications of blockchain are emerging. One of the hottest labor markets is for blockchain developers. [xiii] Blockchain applications are spreading in the financial sector and other industries where middlemen don’t offer much value, and the completion of transactions requires confirmation. Blockchain offers an “append-only” record, where data cannot be erased. [xiv]

Blockchain as an ecosystem is evolving, as platform vendors such as R3/Corda, Ripple and Ethereum align with specific verticals like equity trading. Identity management appears to be the next frontier for blockchain. [xv]

Other payment systems are likely to be disrupted, as the healthcare and Medicare systems look for common structures in which to process transactions. By 2019, some of the world’s finest art will change hands using blockchain transactions. Cryptocurrencies are being recognized as a payment method on many ecommerce sites.

Defending cyber-attacks

Cyber-attacks are consuming time, money and bandwidth. According to McAfee, cyber-criminals are gaining sophistication and launching coordinated attacks on businesses. Some will even use AI to “outsource” their attacks. One IT Director recently told me cyber defense takes up 30 percent of his time. Download the Vistage report Cyberthreats and solutions for small and midsize businesses.

Smart Spaces

[xvi]
For some time there has been movement toward smart cities and workplaces, but the confluence of the technologies listed above (including 5G, IoT and AI) are rapidly transforming the physical spaces in which we work and live. Technology is driving both the expansion of large urban centers in remote parts of the world such as Kenya’s Konza Technology City. 5G will also be an enabler to autonomous vehicles, buses and new forms of public transportation.

The exodus from Silicon Valley

The mass exodus from Silicon Valley continues. For the first time in the dot-com era, more people moved out of the Bay Area than into it. In a recent survey, 46 percent of residents said they planned to move out in the next several years, as the cost of living there continues to swell. The average home in the Bay is $949,000, four times the national average. [xvii] Ironically, the very collaboration tools built there are making it easier to leave.

China tech in decline

Many of China’s top technology stocks have been pounded as of late. Shares of industry darlings Tencent (43 percent) and Alibaba (17 percent) are down dramatically this year through mid-November. The combination of tariffs, a slowing Chinese economy and state censorship have soured investors of China-based technology stocks.

References

[i] Predictions 2019, Forrester Research Predictions Reports
[ii] The Year Ahead 2018, Bloomberg
[iii] Why Being First in 5G Matters, The Wall Street Journal
[iv] Microsoft’s Cloud Strategy Pays Off by Jay Greene, The Wall Street Journal
[v] The Year Ahead 2018, Bloomberg Businessweek
[vi] 8 Top Technology Trends for 2019 and the Jobs They’ll Create, Simplilearn
[vii] Gartner Identifies the Top 10 Strategic Technology Trends for 2019, Gartner
[viii] Technology Futures in 2019, Dimension Data
[ix] The Future of eCommerce: 60 Stats and Trends for 2019 and Beyond by Mark Walker-Ford, SocialMediaToday
[x] The Future of eCommerce: 60 Stats and Trends for 2019 and Beyond by Mark Walker-Ford, SocialMediaToday
[xi] Predictions 2019, Forrester Research Predictions Reports
[xii] The Kiplinger Letter, July 20
[xiii] Who Will Use the Blockchain? Blockgeeks
[xiv] What Is Blockchain And What Can Businesses Benefit from It? by Arthur Iinuma, Forbes
[xv] Technology Futures in 2019, Dimension Data
[xvi] Gartner Identifies the Top 10 Strategic Technology Trends for 2019, Gartner
[xvii] A Victim of Its Own Success, The Economist

Marc Emmer is President of Optimize Inc., a growth consultancy specializing in strategic planning. The release of Marc's second book, "Momentum, How Companies Decide What to Do Next” was covered online by Yahoo Finance, Business insider, CBS and NBC. Marc has crafted strategic plans for over 140 organizations, including more than 50 Vistage members. Marc is also a frequent contributor to the Vistage Research Center and Forbes. Reach him at marc@optimizeinc.net.

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